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Report: Russia, Iran in talks on gas cartel

The structure to provide natural gas would be similar to OPEC, newspaper says.

February 2 2007: 7:22 AM EST

NEW YORK (CNNMoney.com) -- Russia and Iran are in talks on creating a natural gas organization that could shift the alignment of the energy markets, the Wall Street Journal reported Friday.

The cartel would be similar to the structure of the Organization of Petroleum Exporting Countries, but Russian President Vladimir Putin has downplayed talks of setting prices like OPEC, the Journal said.

Russian and Iran are the world's largest and second-largest holders of gas reserves and talks of a cartel have alarmed Europe, which receives a quarter of its gas from Russia, the newspaper said.

Natural gas is becoming a more important source of energy for many countries but producing nations don't work together to try to influence the markets, the paper said. Gas is sold in fragmented markets, unlike oil which is traded in a global marketplace.

But this isn't the first time Russia has been in talks to create an OPEC-like structure and many are doubtful it will go forward, according to the Journal.